Finance Minister Pranab Mukherjee has set at rest firmly and authoritatively all speculative reports that India might buckle under American pressure and fall in line passively with the spirit of the United States’ sanctions against Iran by quietly cutting back its oil imports from Iran. That FM made the categorical statement while on a visit to the US is of added significance.
Earlier, ambassador to the US Nirupama Rao created some confusion by claiming India was cutting down its oil purchases from Iran as a considered decision. Rao was speaking after American politicians and commentators began making threatening noises as part of a psywar. According to media reports, she vaguely hinted that India was acting in tandem with Washington. Of course, Mukherjee’s statement has hit the headlines, as it follows similar indications from China. With China and India defying the US’ sanctions regime, Japan and South Korea and other south-east Asian countries would follow suit. Tehran Times has reported that Delhi is actively exploring various options to work out a payment mechanism for India’s oil imports from Iran and is “trying to buy as much Iranian oil as possible.” The Beijing daily Global Times featured an editorial today calling on China to coordinate with south and southeast Asian countries and “try its best to form a temporary alliance with them in continuing to buy oil from Iran. Such an alliance is possible, as seen from the hesitation of countries like Japan and India in sanctioning Iran.” The editorial anticipated that at some point Washington might even offer to Beijing some trade-off but China won’t cave in as Iran is far too important a relationship to compromise.
The GT editorial carries forward the train of thought that the paper fleshed out in an earlier article a fortnight ago when it inter alia called for coordinating with Russia - “the two should support each other in this [Iran] matter.”
India and China would also factor in that the European Union sanctions against Iran might not prove sustainable in any case. The panic in the European capitals was obvious when Iran threatened retaliation. Within hours, back channels were apparently activated to prevail upon Tehran not to go ahead with its own embargo on oil exports to Europe this week (six months before the EU sanctions will come into effect). It seems Tehran has obliged the European entreaties but its threat of retaliation hangs like the sword of Damocles on the European economies.
Clearly, the assumption that Iran will be brought to its knees through oil sanctions is flawed. Iran has successfully withstood 30 years of US sanctions. It is also wrong to caricature Iran as a chronic case of the so-called Dutch syndrome. Iran has a diverse economy, its human resources are very substantial and it can progress even with reduced oil income.
That is to say, all this drama is actually geopolitical. Evidently, Iran is keen not to exacerbate the tensions. The latest indications are that Tehran is constructively engaging the IAEA inspectors although holding fast to its principled position on the nuclear issue, namely, that it has every right to pursue a nuclear programme as stipulated under the NPT.
All things taken into account, therefore, Delhi has done exceedingly well by taking such a clear-cut stance on the entire question and its ramifications.

Of course, Mukherjee’s statement has hit the headlines, as it follows similar indications from China. With China and India defying the US’ sanctions regime, Japan and South Korea and other south-east Asian countries would follow suit. Tehran Times has reported that Delhi is actively exploring various options to work out a payment mechanism for India’s oil imports from Iran and is “trying to buy as much Iranian oil as possible.” The Beijing daily Global Times featured an editorial today calling on China to coordinate with south and southeast Asian countries and “try its best to form a temporary alliance with them in continuing to buy oil from Iran. Such an alliance is possible, as seen from the hesitation of countries like Japan and India in sanctioning Iran.” The editorial anticipated that at some point Washington might even offer to Beijing some trade-off but China won’t cave in as Iran is far too important a relationship to compromise.